Opposition Brief — Texas & Pacific Railway Co. v. St. Louis Southwestern Railway Co.

SUPREME COURT OF THE UNITED STATES.

OCTOBER TERM, 1946,

THE TEXAS AND PACIFIC RAILWAY >

COMPANY,

Petitioner,

* No. 907.

ST. LOUIS SOUTHWESTERN RAIL-

WAY COMPANY, Debtor,

Respondent. J

RESPONDENT’S BRIEF IN OPPOSITION TO

PETITION FOR A WRIT OF CERTIORARI

To the United States Circuit Court of Appeals

for the Eighth Circuit.

/

\ A. H. KISKADDON,

OLIVER J. MILLER,

\. JACOB M. LASHLY,

Attorneys for Respondent.

LASHLY, LASHLY, MILLER & CLIFFORD,

Of Counsel.

February 7, 1947.

Sr. Louis Law Printtne Co., 415 North Eighth Street. CE ntral 4477.

INDEX

Page

CG - Ts asannscsescodpeiectecdiaceccckants 1

SS bs i445 wx'ds vedevudsdecevss cob eatecnst 2

SD NINE -ae.ve ceccwnakacdésabheetsnhanede 2

EES cu asaxaes cnevesens 6icu0ienasdedkesteainh 3

p PROTPTVET TTT ee TTT eer te 9

I.There is no conflict of decisions among the

circuits and the decision below is fully sup-

WONNNE Rat TOS ROGUE < faxiecacii esas Woeds 9

II. The decision below, which held the Arbitrators’

award to be valid and binding upon the parties,

is in accord with the weight of the authorities

and petitioner failed to show how said decision

is untenable and probably in conflict with the

State law as yet unannounced by the Supreme

SD Ge FN i hi Ks bcs cas Raseeeckucd vedi 18

III. No important question of federal law is in issue. 25

Ce abcd i ven TRG ea Sete BAK 27

Cases Cited.

Atlantic Coastline v. B. & O. R. R. (D. C. Md., 1935),

Se Ge a FRED Re aS va Aab eee 4k ives nuked as 26

Campbell v. Campbell (1916), 44 App. D. C. 142, 242

ec Es Ps woo 0s we pan vation bas abreeiae 20

Columbia v. Canca Co. et al. (1903), 190 U. S. 524,

ee Ot LUNG. wikia sah We one wanewandhanaeeas us 21

Dickens v. Luke (Mo. App.—1928), 2 S. W. (2) 161,

i cht inan Gs echaeh kane edhsewanhs eonceiwee« euek ks 24

Grannopulos v. Pappas (1932), 80 Utah 442, 15 P.

ERE SEA ELIE 29

ii

Higgins-Wall-Dyer Co. v. City of St. Louis (1932),

331 Mo. 454, 53 S. W. (2d) 864, 866............++-- 24

Inglis v. Trickey et al. (1935), 172 Okla. 144, 45 |

(DA) 185, 187.6... cei eee c ence necc cen cvececcees 22

Jacob v. Pacific Export Lumber Co. (1931), 136 Or.

G22, 297 P. B48, B56... cece cen ee cc ecco eens 22

Mackay Radio & Telegraph Co. v. Radio Corp. (1939),

oe. SS eeeeeererererrrrerrt rrr errr 9

McCullough et al. v. Clinch-Mitchell Construction Co.

(C. C. A. 8, 1934), 71 F. (2d) 17, 22, cert. den. 293

oe 9 GFA SMe rrr rie 18, 20

Mutual Benefit Health & Acc. Assn. v. United Cas.

Co. (1944), 142 F. (2d) 390, 393, cert. den. 323

Pope Const. Co. v. State Highway Commission (1935),

337 Mo. 30, 84 S. W. (2d) 920, 921................ 24

Richardson & Sons, Ltd., v. Hedger Transportation

Corp. (C. C. A. 2, 1938), 98 F. (2d) 55, 57......... 18, 20

Ruhlin v. New York Life Ins. Co. (1938), 304 U.S. 202. 23

Wabash Railway Co. v. American Refrigerator Transit

Co. (C. C. A. 8, 1925), 7 F. (2d) 335, 351, cert. den.

ge ee Se TTT errr ee 18, 19

Williams v. Chicago, S. F. & L. Ry. Co. (1892), 112

ce € | | eS er reerrr Try re retry 24

Statutes Cited.

Federal Arbitration Act of Feb. 12, 1925, c. 213, Sec. 11,

Oe Wee, BU, © BG he Thin cn cic ccc cen esis cons 21, 22

Supreme Court Rule 38 (5) (b)............... 2c eee 26

IN THE

SUPREME COURT OF THE UNITED STATES.

OCTOBER TERM, 1946.

THE TEXAS AND PACIFIC RAILWAY )

COMPANY,

Petitioner,

= > No. 907,

ST. LOUIS SOUTHWESTERN RAIL-

WAY COMPANY, Debtor,

Respondent. 3

RESPONDENT’S BRIEF IN OPPOSITION TO

PETITION FOR A WRIT OF CERTIORARI

To the United States Circuit Court of Appeals

for the Eighth Circuit.

OPINIONS BELOW.

The Findings of Fact, Conclusions of Law and Order

of the United States District Court for the Eastern Divi-

sion of the Eastern Judicial District of Missouri dis-

missing the claim of petitioner are unreported, and are

found at page 575 of the Record herein. The opinion of

the United States Circuit Court of Appeals for the Eighth

Circuit affirming the decree below is also unreported as

yet, and is found at page 589 of the Record.

iia

JURISDICTION.

The judgment of the Court of Appeals was entered on

November 27, 1946 (Record page 589). Petition for re-

hearing was filed on December 9, 1946 (Record pages 601-

607), and denied on December 16, 1946 (Record page 609).

The petition for writ of certiorari was filed on January 17,

1947, and the jurisdiction of this Court is invoked under

Section 240 (a) of the Judicial Code as amended by the

Act of February 13, 1925, 28 U.S. C. A. 347.

QUESTIONS PRESENTED.

The only question presented here is whether respondent,

an intermediate carrier, is liable to petitioner, the initial

carrier, for certain proportions of a joint freight charge

claimed by petitioner for the transportation of crude petro-

leum over a through route from Wickett, Texas, to

Whiting, Indiana. Petitioner’s claim, which is grounded

on the alleged violation by respondent of certain Manda-

tory Freight Accounting Rules, formulated by the Railroad

Accounting Officers Association, was denied by the Inter-

line Freight Accounting Arbitration Committee and by

the Interline Freight Accounting Arbitration Appeal Com-

mittee. Petitioner challenges the award of the arbitrators,

which both the district and the appellate courts hold to be

conclusive of the issues and binding upon the parties.

All other questions formulated at pages 2 and 3 of the

petition are either merely academic and speculative, or are

otherwise wholly irrelevant to the case and to the issues

decided by the courts below.

_—

STATEMENT.

In the latter part of November, 1927, an oil field was

developed near Wickett, Ward County, Texas, a station

served by the Texas and Pacific Railway Company, herein-

after also referred to as petitioner. The crude oil was

to be refined in Whiting, Indiana, and petitioner was,

therefore, anxious to establish a through rate from Wickett

to Whiting, with the concurrence of all the connecting

railway lines (Record page 46 and Debtor’s Exhibit 3,

Record pages 416-417). Petitioner is the initial carrier

and operates a line of railroad from Wickett to Big Sandy,

Texas. The connecting carriers are: respondent and its

Texas subsidiary, which operate lines of railroad from

Big Sandy to St. Louis, Missouri, and East St. Louis,

Illinois; and the Alton Railroad Company, the Chicago &

Eastern Illinois Railroad Company, the Ilinois Central

Railroad Company, the Wabash Railroad Company, here-

inafter called ‘‘the Illinois trunk lines’’, which operate

lines of railroad from East St. Louis to Chicago junctions.

The terminating carrier is the Elgin, Joliet & Eastern

Railroad Company, which delivers the oil to the consignee,

the Standard Oil Company, at Whiting, Indiana, and

collects from it the freight charges (Stipulation of Facts,

Record pages 31-32; 173).

The through rate was established at 37¢ per 100 pounds

of crude oil, and was published in the Southwestern Lines’

Tariff 125-C, Suppl. No. 3, issued on November 17, 1927, and

effective on November 24, 1927 (Claimant’s Exhibit 1,

Record page 49). Respondent’s Joint Division Sheet No.

9828, also effective on November 24, 1927, allowed 6.5¢ of

the through rate of 37¢ to the lines north of East St,

Louis, and the balance to the lines south of East St. Louis

(Claimant’s Exhibit 15, Record page 87). The division of

—

the balance of 30.5¢ was established at 21.35¢, or 70%, to

petitioner, and 9.15¢, or 30%, to respondent and its Texas

subsidiary, in spite of the disproportion of this division

to the mileage haul (for a discussion of this disproportion,

see Record page 277). No question arises concerning the

aforesaid divisions under the 37¢ rate.

In March, 1928, petitioner began negotiations with re-

spondent for the reduction of the rate to 32.5¢ (Claimant’s

Exhibit 18, Record page 96). Respondent consented to

the publication of a through rate of 32.5¢ on condition

that it would continue to receive for itself and its sub-

sidiary the same division as before, namely, 9.1¢ (Claim-

ant’s Exhibit 19, Record page 96; Claimant’s Exhibit 20,

Record page 97; Stipulation of Facts, Record page 35—

bottom), thus leaving 16.9¢ for petitioner. The reduction

of the rate was not submitted for concurrence to the IIli-

nois lines, whose 6.5¢ division was not affected thereby

(Debtor’s Exhibit 12-A, Record page 419; Debtor’s Ex-

hibit 12-B, Record page 420).

The new through rate of 32.5¢ from Wickett, Texas, to

Whiting, Indiana, was published in respondent’s Tariff

No. 125-C, Suppl. No. 25, issued on August 9, 1928, and

effective September 18, 1928 (Stipulation, Record page 36;

Claimant’s Exhibit 5, Record page 57).

Prior to September 18, 1928, on which date the 32.5¢

rate was to come into effect, the railway lines operating

north of East St. Louis decided to raise their division from

6.5¢ to 10¢, effective August 15, 1928. Notice of this

change was given by the Illinois trunk lines on August 8,

1928 (Claimant’s Exhibit 26, Record page 120), and they

refused to recede from their position ‘‘despite the vigorous

protests of interested connecting carriers, including ap-

pellant [petitioner] and appellee [respondent]’’ (Opinion

Court of Appeals, Record pages 591-592; Record pages

a en

393-396; Debtor’s Exhibit 21, Record page 426), which

protests were also made to the Interstate Commerce Com-

mission (Claimant’s Exhibit 26-B, Record page 126;

Claimant’s Exhibit 26-A, Record page 125).

Since the Elgin, Joliet & Eastern, as terminating carrier,

collected the freight charges on all of the petroleum, the

Illinois trunk lines were able to enforce their demand for

10¢ by withholding that amount in settlements with

prior carriers. Neither respondent nor petitioner ever

received the division of the reduced rate which they in-

sisted lawfully accrued to them.

The first oil movement from Wickett to Whiting in-

volved in this suit, as to which the Illinois lines retained a

division of 10¢, took place on October 19, 1928. Respond-

ent had then the alternative either to charge the loss of

revenue entirely upon petitioner or to apportion said loss

between itself and petitioner.

Respondent’s agreement with petitioner allowed it an

arbitrary of 9.1¢ and not a percentage. Standing on the

literal terms of said agreement, respondent could have

retained its 9.1¢ and remitted the balance, namely 13.4¢

to petitioner (Record page 485, top). This is admitted

by petitioner’s accountant and witness Oliver (Record

page 344, top). Instead of taking this position and in

order to help petitioner, respondent converted the divi-

sion of 9.1¢ to respondent and of 16.9¢ to petitioner, into

percentages, resulting in 35% or 7.875¢ to respondent,

and 65%, or 14.625¢, to petitioner (Stipulation, Record

page 38). The difference between 14.625 per ewt. which

petitioner received for the period in question and what it

would have received had it been paid 16.9¢, amounts to

$64,424.46, and is the amount which petitioner seeks to

recover from respondent (Stipulation, Record page 38,

bottom).

—

It should be noted that the shipments in question moved

on what is known as ‘‘junction settlement’’, which is a

procedure for the collection of freight, and is authorized

as an alternative method to ‘‘through billing’ by the

Mandatory Freight Accounting Rules adopted and agreed

to by the major railroads of the United States, including

petitioner and respondent (Stipulation, Record page 32,

No. 3 and page 37, bottom; Opinion Court of Appeals,

Record page 593, bottom; page 594). In through billing,

a through interline waybill, issued by the original carrier

accompanies each shipment from origin to destination.

This through waybill shows, among other things, the

origin and destination of the shipment, consignor and

consignee, route of movement, the applicable rate and

and the information necessary to the apportionment of

revenue between connecting carriers. As it is provided

for by Mandatory Rule 118 (Record page 570), on ship-

ments moving on through billing, freight charges collect,

the destination carrier collects the charges from the con-

signee and accounts to prior earriers for their established

divisions of the applicable rate (Stipulation, No. 3, Record

pages 32-33; Opinion Court of Appeals, Record page 593).

On the junction settlement plan, which is the procedure

involved in the present suit,* when the shipments of

petitioner arrived at East St. Louis, respondent changed

the headings of their waybills, which read ‘‘to Whiting,

Indiana,”’ to read ‘‘to East St. Louis, Illinois’’, and the

headings reading ‘‘Consignee: Standard Oil Company

of Indiana’’ to read ‘‘Consignee: Standard Oil Company

of Indiana, Whiting, Indiana’”’ (Stipulation, No. 5, Record

pages 37-38). Thereafter, the Illinois trunk lines issued

new waybills for the transportation from East St. Louis

to Whiting.

* This suit concerns merely oil shipments moving on “junction settle-

ment,” and covers the period October 19, 1928, until December 27, 1929,

when “through billing” was established (Stipulation, Record page 38;

Record page 482).

—

= re

This method permitted cash settlements to be made

with the Illinois lines at the close of each week’s business

and enabled respondent and petitioner to receive their

proportion of the revenue thirty days sooner than under

through billing.

Respondent had been operating under the “junction

settlement” plan since March 1, 1920, when it came out of

federal control after the first World War, without capital

or government guarantee (Record page 482). Petitioner,

which was perfectly aware of this practice when it nego-

tiated for and routed these shipments over respondent’s

line and accepted this procedure at the time upon re-

spondent’s avowed intention to maintain same (Debtor’s

Exhibit 34, Record page 494; Debtor’s Exhibit 35-A,

Record page 495; Debtor’s Exhibit 36-A, Record page 497),

is not justified now in charging that respondent “failed

to follow the shipping instructions” of petitioner (Peti-

tion, page 5), as if by so doing respondent were commit-

ting wrong or failing to live up to contractual obligations.

Cash settlements between respondent and the Illinois

trunk lines at East St. Louis were accomplished in the

following manner as provided by the Mandatory Rules,

135 ff. (Record pages 570-572). Respondent on delivering

a shipment to an Illinois trunk line presented that carrie-

with a bill for that part of the joint rate chargeable to

the transportation from Wickett to East St. Louis. The

Illinois line receiving the shipment advanced to respond-

ent the charges accruing on the transportation from

Wickett to East St. Louis, and respondent remitted to

petitioner its division of the revenue (Record, page 405).

Elgin, Joliet & Eastern collected from consignee at des-

tination the full freight charge for the movement on the.

through rate from Wickett to Whiting (Record, page

173).

a wen

When the Illinois trunk lines started deducting 10 cents

on junction settlements, this created a disputed division

(Record page 486), and Freight Accounting Rule 143

(Record page 571) became applicable. This rule provides

as follows:

“The outbound carrier [Illinois lines] shall prepare

junction Settlement Sheets * * * In case of dis-

puted divisions, the settlements made by the outbound

carrier [Illinois lines] must be accepted by the in-

bound carrier [respondent] pending agreement by

traffic departments of interested carriers” (Record

pages 485-6).

This left no alternative to respondent, and shows the in-

accuracy of petitioner’s statement that respondent “acqui-

esced in the cut” (Petition, page 6).

Following the Procedure in Disagreements set forth in

the Mandatory Rules 272 ff. (Record pages 572-574), peti-

tioner instituted arbitration proceedings against respond-

ent, alleging that respondent was liable to petitioner for

violation of the Mandatory Rules. Both the Interline

Freight Arbitration Committee and the Interline Freight

Arbitration Appeal Committee found the issues in favor

of respondent, held that it had not violated any of the

Mandatory Interline Freight Accounting Rules and that

petitioner had no cause of action against respondent (Rec-

ord pages 265, 269, 273; on appeal, Record pages 226, 230,

233).

The tndings of the arbitration committees were upheld

both by the District (Record page 577) and by the Ap-

pellate Courts, which held that the award was final and

binding upon the parties (Record pages 597-600).

eR

ARGUMENT.

I. There Is no Conflict of Decisions Among the Circuits

and the Decision Below Is Fully Supported by the

Record.

1. This case involves no complicated issue. Petitioner

charges that respondent is liable to it for the alleged vio-

lation of certain Mandatory Rules. This issue has been

submitted by petitioner to two Freight Interline Arbitra-

tion Committees, which held that no mandatory rule had

been violated by respondent, and that petitioner had no

cause of action against respondent under the Rules. The

award has been upheld by two federal courts, and peti-

tioner now seeks certiorari to review their decisions,

alleging the great importance of the questions involved

here. Petitioner claims that ‘‘these questions are novel’’

(Petition page 12) and therefore is not alleging any con-

flict of decisions among circuit courts, but relies on the

importance of the case as the ground for the granting of

certiorari by this Court. Petitioner cites the case of

Mackay Radio and Telegraph Co. v. Radio Corp. (1939),

306 U. S. 86, 1. c. 89, as a case in which this Court granted

certiorari solely ‘‘because of the nature and importance

of the case’’ (Petition, page 13). Petitioner’s quotation

is not complete. This Court actually stated:

‘‘We granted certiorari, 305 U. S. 582, ante, 367,

59 S. Ct. 73, because of the nature and importance of

the case, on a petition which urged as grounds for its

allowance that validity and infringement of the Carter

patent were in doubt and that, as petitioner is the

only competitor of respondent in the business of world

wide public radio communication, further litigation,

resulting in conflict of decision among circuits, was

improbable.’’ (Our emphasis.)

oe a

In the present case no contention is made or could be

made by petitioner that conflict of decisions among cir-

cuits may not arise in the future. The Mandatory Rules |

are accepted and followed by the major railroads of the

United States, and cases concerning the Rules may arise

in any circuit of the United States.

9. Petitioner alleges that ‘‘the Court of Appeals has

wholly misconceived the effect of the decisions of these

Arbitration Committees’? (Petition, page 13). The con-

trary is true. Petitioner argues that Rule 118 (Record

page 570) requires the destination carrier to account for

the proper revenue, and that by using the ‘‘junction

settlement’? respondent ‘‘made itself the collecting car-

rier of that portion of the joint rate accruing up to East

St. Louis [and] therefore under the express terms of the

Rule * * * it is ‘responsible for the collection of the proper

revenue, and for the proper reporting to all roads in-

terested,’ ’’ irrespective of whether or not respondent col-

lected such revenue (Petition, pages 29, 7, 12 and 19).

Petitioner made, unsuccessfully, the same contention

before the Arbitrators as it is shown by the following

passage of its brief before the Arbitration Committee:

‘‘R. A. O. A. Mandatory Rules 79 and 73 provide

that statements of differences ‘if correct shall be

promptly embodied in a correction account by settling

carrier’. The St. Louis and Southwestern Railway by

its action in suppressing through billing became the

‘settling carrier’ and as such responsible under the

rules for the adjustment of Texas and Pacific Rail-

way statements of differences’ (Record page 324,

§ 20).

Petitioner’s present position is that the arbitrators did

not absolve respondent from liability under the Mandatory

Rules and that ‘‘they did not decide, as inadvertently

—

a

stated in the opinion below, that ‘neither Rule 118 or 79

had any application on the question before them * * * and

this without regard to ultimate decision of that dispute by

the courts and by the Commission’ (Record page 599)’’

(Petition, page 9).

The record shows beyond any shadow of a doubt that

} the contrary is true.

With specific reference to Rule 79, Arbitrator B. F.

Russell said:

**It is my opinion that there has been no violation

of Mandatory Rule 79, 1928 Procedure, and Mandatory

Rule 73, 1929 and subsequent Procedures’’ (Record

pages 263-264).

Similarly, Appeal Arbitrator K. W. Price stated:

‘*Question (2) * * * is its [respondent’s] refusal to

issue correction account covering the statements of

differences attached a violation of Mandatory Rule 79

(1928-1929) ?

‘‘Answer. No’’ (Record page 232).

Petitioner contends that the arbitrator’s award:

‘left open the further question of whether or not it

was respondent’s duty under established accounting

rules and practices to collect this illegal exaction from

the Illinois lines, and account to prior lines in ac-

cordance with their agreed divisions’’ (Petition, pages

13-14).

The record shows that such issue was discussed and de-

cided by the arbitrators in the very language in which

petitioner submitted it to them, as issue (e), namely:

‘In a case where a carrier makes delivery to a con-

nection at a junction point in junction settlement and

renders an incorrect interline settlement, because of

the fact that the connection has arbitrarily retained

excessive revenue, is the carrier making such incorrect

a <n

interline settlement responsible, under the rules, to

carriers up to junction point for correct accounting

and correct distribution of revenue, or must the

carriers up to the junction point proceed against the

carrier that has retained excessive revenue?”’ (Record

pages 266 (e), 271 (e); on appeal: pages 224, 227-8.)

This is the same issue which was presented by peti-

tioner’s claim in the District Court (Record pages 7, bot-

tom, and 8) and which is repeated here.

The arbitrators unanimously held that respondent was

not liable to petitioner on such or any other of the issues

presented, and that it had not violated any of the ap-

plicavle Mandatory Rules.

Arbitrator B. F. Russell said:

‘It is my decision that there was no violation of

mandatory interline freight accounting rules, and

that the Texas and Pacific have no cause of action

and must assume the arbitration fee of $15.00 in ac-

cordance with Rule 282, Jan. 1, 1936 Procedure’

(Record page 265).

Arbitrator F. J. Tague, upon whose decision petitioner

attempts to rely (see petition, page 9) actually concluded

his decision with the following words:

“Tt is my opinion that a violation of the Manda-

tory Interline Freight Accounting Rules has not been

made out and that the Texas and Pacific Railway

Company has no cause of action and must assume

the arbitration fee * * *’? (Record page 269).

Arbitrator E. N. Larson said:

‘Rule 139 of the 1929 procedure [same as Rule

143 of the 1928 procedure, Record page 571] provides

that in case of disputed divisions, the original settle-

ment made by the outbound carrier must be accepted,

pending agreement by traffic departments. * * * In

aa ee

my opinion this controversy appears to be a question

of disputed divisions between traffic departments, and

the Texas and Pacific Railway Company is without

cause of action and should assume the arbitration

fee * * *’’ (Record page 273).

On appeal the same results were reached by the Appeal

Arbitrators. Thus, H. V. Clemens, Appeal Arbitrator,

said:

‘*It is the decision of this Appeal Arbitrator that

the Texas & Pacific Ry. Co. has no cause of action

against the St. Louis Southwestern Ry. Co. under the

mandatory rules of this association and the Texas &

Pacific Ry. Co. should therefore assume the arbitra-

tion and appeal fees * * *’’ (Record page 230).

Similarly, K. W. Price, Appeal Arbitrator, concluded

that petitioner

‘‘has no cause of action against the St. Louis South-

western Railway Company under the mandatory

rules of this Association’’ (Record page 233).

Appeal Arbitrator, G. W. Streicher, stated:

‘‘T concur in the decision reached by Arbitrators

Price and Clemens that the Texas and Pacific Ry Co.

has no cause of action and should assume the arbitra-

tion and appeal fees * * *’’ (Record page 226).

Petitioner does not claim that the arbitrators were

wrong, and that their award should have been set aside

or corrected by the courts. Petitioner merely says that

the courts ‘‘wholly misconceived the effect of the de-

cisions of these Arbitration Committees’’ (Petition, page

13). The record reviewed above shows unmistakably that

the six arbitrators, all railroad experts, found that re-

spondent had not violated any one of the applicable

Mandatory Rules.

The findings of the District Court (Conclusion No. 3,

Record page 577), and of the Circuit Court of Appeals

Re ee ee es yee ery el i ee

ae

(Record pages 597-600) are irrefutably justified by the

record.

3. Petitioner states that

‘“The Arbitration Committee in this case did not by

interpretation limit in any way the obligations placed

on the waybill destination carrier by Rule 118 to

collect the proper revenue.”’ :

This is true, but not in the sense intended by petitioner.

The arbitrators did not limit, nor could they have limited,

the liability of the Elgin, Joliet and Eastern Railroad

Company as the terminating carrier under Rule 118, the

common law and statutory law, for the collection of the

freight and the apportionment of the proper revenue be-

tween the participating carriers. The Elgin, Joliet and

Eastern Railroad Company collected the money which

petitioner seeks, and, according to petitioner’s contention,

is illegally withheld. If so, there is nothing that prevents

petitioner from asserting its claim against the Elgin,

Joliet and Eastern Railroad Company.

This point was clearly made by Appeal Arbitrator

Streicher, who stated:

‘The responsibility rests with the settling carrier

[the Elgin, Joliet & Eastern R. Co.] to render a

correct settlement to other interested lines, and this

responsibility is not relieved because of the suppres-

sion of a through waybill at an intermediate point.

This point is clearly established under provisions of

Mandatory Rules Nos. 62 to 79, inclusive (1929 edi-

tion), and corresponding preceding and superceding

rules’? (Record page 225).

The same point was inade by the Circuit Court of Ap-

peals, which said:

‘<Tf¢ we concede for the argument that appellant is

correct in its contention that the lawful rate on crude

=

petroleum from Wickett to Whiting was 32.5 cents,

in which the Illinois Trunk Lines were bound by con-

tract with appellant and appellee to participate for

a division of 6.5 cents, a question which we do not

decide, it would seem that appellant’s remedy was

an action against the Elgin, Joliet & Eastern, the

carrier which collected all freight charges, for the

recovery of the lawful division of the established

rate’’ (Record page 592).

Nor did the arbitrators express any opinion as to the

action of the Illinois lines which were not even parties to the

arbitration proceedings, in withholding a larger propor-

tion of the revenue than originally agreed upon.

In the arbitration proceedings petitioner made the fol-

lowing contention:

‘‘The fact that Illinois Freight Association carriers

arbitrarily retained revenue based upon the forcible

imposition of an illegal division in no way mitigates

in favor of the St. Louis and Southwestern Railway in

its violation of the rules. The Texas and Pacific Rail-

way can properly look only to the St. Louis and

Southwestern Railway for redress under the manda-

tory rules. The St. Louis and Southwestern Railway

has had ample opportunity to contest the illegal action

of the Illinois lines and if it has failed to do so the

disability is of its own creation [sic]. The St. Louis

and Southwestern alone is answerable for the infrac-

tion of the rules here involved’’ (Record page 324).

As referred to above, the six arbitrators unanimously

held that respondent had not violated any of the applica-

ble Mandatory Rules, and that, under the Rules, respond-

ent is not liable to petitioner for the action of the Illinois

lines, upon which action the arbitrators refused to pass.

In its petition, Texas & Pacific quotes part of the deci-

sion of Arbitrator Price:

rs a a

— 1446—

«“* * * T agree with the unanimous decision of the

arbitrators, and it is the decision of this appeal arbi-

trator that while the Texas & Pacific Railway Com-

pany may have had the right to present the case to the

Interstate Commerce Commission, or may have legal

rights in court, it has no cause of action against the

St. Louis Southwestern Railway Company under the

mandatory rules of this Association. The Texas &

Pacific Railway Company should, therefore, assume

the arbitration and appeal fees in accordance with the

requirements of Mandatory Rule 300, effective Janu-

ary 1, 1936’’ (Petition page 14).

The suggestion of the arbitrators that petitioner may

have some rights which it may assert before the Interstate

Commerce Commission or the courts does not even imply

that such rights, if any, should be asserted against re-

spondent, and said rights seem rather to be those which

petitioner may assert against the Illinois lines which with-

held the revenue claimed by petitioner, or the Elgin, Joliet

& Eastern Railroad Company, the terminating carrier

which collected the freight.

Similarly, the district court expressly declined to rule

on the legality of the action of the Illinois trunk lines in

exacting increased divisions of the 32.5 cent rate (Conclu-

sion of Law No. 4, Record page 577). The Circuit Court of

Appeals affirmed that decision and held that, irrespective

of whether or not the division of the 32.5 cent rate in the

proportions of 6.5 cents to the Illinois lines and 26 cents to

petitioner and respondent, was a contract valid and bind-

ing upon the Tllinois lines, such contract neither expressly

nor impliedly made respondent liable to petitioner for

revenue not collected from the Illinois lines (Record pages

597-598).

This point is not answered by petitioner, which discusses

in detail why the Illinois lines had no right to retain a

ee a a CRN Wp er ch en ee :

—

larger revenue (Brief, pages 24-28), but fails to show why

respondent herein should be liable for such action of the

Illinois lines, except for respondent’s alleged liability as

a result of a claimed violation of the Mandatory Rules—

in the face and in spite of the arbitrators’ decision that no

Mandatory Rule has been breached by respondent.

Specifically, Appeal Arbitrator G. W. Streicher pointed

out in his decision that

‘“‘The division sheet called for distribution of a

specified sum of money and since the amount of

revenue received was not sufficient for distribution

strictly in accordance with the division sheet, it must

follow that division sheet was not applicable and the

settlement made by the StLSW Ry. Co. under Manda-

tory Rule 101 constituted a correct settlement. The

StLSW Ry. Co. cannot be held in violation of Rule 73

(1929 edition) by its refusal to accept and account

for statements of difference based on inapplicable

: divisions’’ (Record page 226).

The conclusion seems warranted that the authorities

quoted by petitioner as supporting the proposition that

‘‘where the arbitrators refuse to consider a claim because

they deem it not to be within their jurisdiction under the

submission, such claim may properly be made the basis of

an action’’ (Petition page 17), may be applicable to sus-

tain an action against the Elgin, Joliet & Eastern Railroad

Company or the Illinois lines, but not against respondent,

which the arbitrators found not to be liable under any of

the applicable Mandatory Rules.

== 18

II. The Decision Below, Which Held the Arbitrators’

Award to Be Valid and Binding Upon the Parties, Is in

Accord With the Weight of the Authorities and Peti-

tioner Failed to Show How Said Decision Is Untenable

and Probably in Conflict With the State Law as Yet

Unannounced by the Supreme Court of Missouri.

Petitioner claims that the ‘‘trial Court’s conclusion of

law No. 3 (Record page 577) to the effect that the award

of the Arbitration Committee adjudicated petitioner’s

rights under the rules is untenable, and the decision of the

Court of Appeals affirming that ruling is likewise un-

tenable’’ (Petition, pages 17-18). This contention amounts

to a challenge of the binding character of the award of the

arbitrators, which award petitioner sought in the first

place.

The Circuit Court of Appeals held that

‘‘Whether the arbitration committees were right

or wrong in their interpretation and application of

the Mandatory Freight Accounting Rules is no con-

cern of the courts. The controlling issue in the case

having been submitted to arbitration and decided, the

decision of the arbitrators is binding on the courts.

Wabash Railway Oo. v. American Refrigerator Transit

Co., 8 Cir. 7 F. 2d 335, 351; McCullough et al. v.

Clinch-Mitchell Construction Oo., 8 Cir., 71 F. 2d 17,

22; Richardson & Sons, Ltd. v. Hedger Transportation

Corp., 2 Cir., 98 F. 2d 55, 57’’ (Record pages 599-600).

It is submitted that the above authorities are in point

here, that they represent the applicable law, and that they

fully support the holding of the appellate court.

In the Wabash case, cited above, cert. den. 270 U. S. 648,

70 L. Ed. 776, the Cireuit Court for the Kighth Circuit

said, loc. cit. page 351:

—

‘‘ Arbitration is favored by the courts. It is a mode

of settling disputes less expensive and more expedi-

tious than court procedure. In these days of long

drawn out litigation and ever-increasing expense of

trial, it may well become a special favorite of the law.

Here were serious questions productive of litigation.

The parties entered into an agreement that they should

be considered and determined by an eminent and

learned lawyer. He did so, and rendered his decision.

The submission of the matter carried with it an im-

plied agreement to be bound thereby. There is no

claim made that the decision of the arbitrator was

the result of fraud, partiality, misfeasance, or palpable

mistake, resulting in an injustice to either party or

that the arbitrator went beyond the scope of the ques-

tions submitted. If the statements of fact of the

amended bill are to prevail, we see no reason why the

parties to the arbitration are not bound as to the

questions submitted to and determined by the arbi-

trator, and precluded from again agitating them. 2

Ruling Case Law, § 32, p. 386; Barnard v. Lancashire

Ins. Co., 101 F. 36, 41 C. C. A. 170; Burchell v. Marsh

et al., 17 How. 344, 15 L. Ed. 96; City of Omaha v.

Omaha Water Co., 218 U. S. 180, 30 S. Ct. 615, 54

L. Ed. 991, 48 L. R. A. (N. 8.) 1084; Toledo S, S. Co.

v. Zenith Transp. Co., 184 F. 391, 106 C. C. A. 501;

MecNees v. Ins. Co., 69 Mo. App. 232; Chippewa Lumber

Co. v. Phenix Ins. Co., 80 Mich. 116, 44 N. W. 1055;

Morse on Arbitration and Award, p. 293. See also,

extended note to Williams et al. v. Branning Manu-

facturing Co., 47 L. R. A. (N. 8.) 337, where a mass

of authorities is collected on the general subject.

‘Every reasonable intendment is indulged in favor

of such an award. Reedy v. Scott, 90 U. S. 352, 23

L. Ed. 109; Grant v. National Bank of Auburn (D. C.),

232 F. 201; Aetna Ins. Co. v. Hefferlin, 260 F. 695, 171

C. C. A. 433. Such arbitrations are recognized by the

laws of Missouri, the state where the agreement to

arbitrate was made. Ellison v. Weathers, 78 Mo. 115;

Murphy v. Northern British & Mercantile Co., 61 Mo.

App. 323.” (Emphasis ours.)

In the McCullough case, cited above cert. den. 293 U. S.

582, 79 L. Ed. 678, the same court said, loc. cit. page 22:

‘‘Where an award has been made and the matter is

how to make it effective, the law in the federal courts

is as follows: Where there is national or state legisla-

tion providing for legal enforcement of an award,

that will be done on the principle that such governs

the remedy to enforce a recognized right. Red Cross

Line v. Atlantic Fruit Co., 264 U. S. 109, 44 S. Ct. 274,

68 L. Ed. 582. Where there is no such statute, the

award will be given effect ‘in any appropriate pro-

ceeding at law, or in equity.’ Red Cross Line v.

Atlantic Fruit Co., 264 U. S. 109, 121, 44 S. Ct. 274,

276, 68 L. Ed. 582, and see Bayne v. Morris, 1 Will.

97, 17 L. Ed. 495; Burchell v. Marsh, 17 How. 344, 15

L. Ed. 96; Karthans v. Ferrer, 1 Pet. 222, 7 L. Ed. 121;

Davy v. Faro, 7 Crouch 171, 3 L. Ed. 305.’’

In the Richardson case, cited above, the Circuit Court

of Appeals for the Second Circuit held as follows, loc. cit.

page 57:

“This Court is without power to amend or overrule

merely because of disagreement with matters of law

or facts determined by the arbitrators. The Hart-

bridge, 2 Cir., 62 Fed. 72. Their award is final and

binding. Columbia v. Canca Co., 190 U. S. 524, 23 S.

Ct. 704, 47 L. Ed. 1159; New York and Cumberland

Ry. Co. v. Myers, 18 How. 246, 59 U. S. 246, 15 L. Ed.

380; Burchell v. Marsh, 17 How. 344, 58 U. S. 344, 15

L. Ed. 96; Georgia and F. R. Co. v. Brotherhood of

Locomotive Engineers, 5 Cir., 217 F. 755; In re Wil-

kins, 169 N. Y. 494, 62 N. E. 575. There is no claim

here of fraud, corruption or misconduct affecting the

award.”

Similarly, the Circuit Court of Appeals for the District

of Columbia in Campbell v. Campbell, 44 App. D. C. 142

(1916), cert. den. 242 U. S. 642, 61 L. Ed. 542, stated that:

< o

“An award * * * valid on its face * * * until set

aside in a proper proceeding * * * has the force of

a judgment, and therefore became res adjudicata as

to all matters embraced in the submission * * * be-

tween the parties.” (Emphasis ours.)

See, also, the Circuit Court of Appeals for the First

Circuit in Mutual Benefit Health & Acc. Ass’n v. United

Cas. Co. (1944), 142 F. (2d) 390, 393, cert. den. 323 U. S.

721.

The question is not a novel one for this Court.

In Columbia v. Canca Co. et al. (1903), 190 U. S. 524,

530, 47 L. Ed. 1159, 1164, Justice Holmes, speaking for this

Court said:

“Tt is for us to determine the scope of the Commis-

sion [of arbitration], whatever may have been its own

finding with regard to its powers. But when its

powers are established we are not called upon to re-

vise any finding that could have been made without

going beyond the line which we lay down.”

Reference should also be made to the Federal Arbitra-

tion Act of 1925, 9 U.S. C. A. 11, which reads as follows:

“In either of the following cases the United States

Court in and for the district wherein the award was

made may make an order modifying or correcting the

award upon the application of any party to the arbi-

tration—

“(a) Where there was an evident material miscal-

culation of figures or an evident material mistake in

the description of any person, thing, or property re-

ferred to in the award.

“(b) Where the arbitrators have awarded upon a

matter not submitted to them, unless it is a matter not

affecting the merits of the decision upon the matter

submitted.

_—

“(¢) Where the award is imperfect in matter of

form not affecting the merits of the controversy.

“The order may modify and correct the award, so

as to effect the intent thereof and promote justice be-

tween the parties. Feb. 12, 1925, c. 213, § 11, 43 Stat.

885.”

It should be noted in this connection that petitioner

does not even attempt to claim that its contention is within

the permissible scope of the review authorized by the

statute.

The same law is affirmed in the various jurisdictions of

the Union. See the Supreme Court of Oregon in Jacob v.

Pacific Export Lumber Co. (1931), 136 Or. 622, 297 P. 848,

856:

“Every matter which was decided or could have

been presented to the arbitrator and decided in an

award comes within the rule of res judicata. Hooper

v. Pennick (102 Or. 382, 202 P. 743); First Nat. Bank

v. Buckland, 130 Or. 364, 280 P. 331, 332.”

The Jacob case was quoted with approval by the Su-

preme Court of Utah in Grannopulos v. Pappas (1932),

-80 Utah 442, 15 P. (2d) 353, 356.

See also, in accord, the Supreme Court of Oklahoma in

Inglis v. Trickey et al. (1935), 172 Okl. 144, 45 P. (2d)

135, 137, and authorities cited there.

Petitioner states “We submit that the opinion below

creates uncertainty and confusion” (Petition, page 18).

In view of the authorities quoted above, and of the bind-

ing character which should be conceded to the award, “un-

certainty and confusion” would have arisen should the

court below have set aside or disregarded the award of

the Interline Freight Accounting Committees.

= wa

Petitioner alleges as a ground for the granting of cer-

tiorari that

“The questions of local law involved in this case

are important, and the Circuit Court of Appeals has

decided them in a way that is untenable and there-

fore probably in conflict with the State law as yet

unannounced by the Supreme Court of Missouri.

. 2 * * . * «

«“* * * the Circuit Court of Appeals has decided

the question of petitioner’s legal right to hold re-

spondent responsible for the collection and account-

ing to it of its agreed division out of the joint rate,

and the question of the scope and effect of the deci

sions of the Arbitration Committees, in a way that

is untenable, and in conflict with agreed upon ac-

counting rules and practices, and in conflict with the

weight of authority. It cannot be assumed that the

Missouri Courts would so erroneously rule, and we say

therefore as did this court in Ruhlin v. New York

Life Insurance Company (Supra, 1. c. 206), ‘the de-

cision below was “probably untenable” and therefore

probably in conflict with the State law as yet unan-

nounced by the highest court of the State’ and cer-

tiorari should be granted.” (Petition page 20.)

To complete the quotation of this court’s decision in

the Ruhlin case, 304 U. S. 202, the following passage

should be added:

“No such showing [of conflict with local law] was at-

tempted by the petition” (Loc. cit. page 206).

It is submitted that no such showing is made by Texas &

Pacific in its petition. As the index of the petition readily

shows, not a single Missouri case, statute, textbook or

law review article is cited by petitioner in support of its

contention.

On the contrary, Missouri courts have decided cases in-

volving arbitration awards, and have held that the arbi-

— 24

trators’ decisions are final and binding upon the parties,

except for cases of fraud and similar matters which are

not involved in the present case.

In Higgins-Wall-Dyer Co. v. City of St. Louis (1932),

331 Mo. 454, 53 S. W. (2d) 864, 866, the Supreme Court

of Missouri stated as follows:

“‘Neither by the contract of submission to arbitra-

tion nor by the statutes is the Court given power to

review an award for errors of law. Unless there is

some reservation in the contract submitting a contro-

versy to arbitration the arbitrators are to pass upon

the whole controversy, including the law and the

facts and their decision as to each is final, binding

and conclusive.’ ”

See also Pope Const. Co. v. State Highway Commission

(1935), 337 Mo. 30, 84 S. W. (2d) 920, 921, in which the

Supreme Court of Missouri, referring to an arbitration

proceeding brought under the Missouri statutory provi-

sions, said:

‘From a reading of the foregoing sections of the

statute, it seems plain that the court is not authorized

to examine or review the evidence or determine

whether under the evidence the award is correct and

that it cannot go into or adjudicate the merits of the

controversy.’’

In Dickens v. Luke (1928), 2 S. W. (2d) 161, 162, the

Springfield Court of Appeals said:

‘‘Plaintiff went into the arbitration with his eyes

open and has received the fruits of the award. No

fraud or partiality is shown, and we find no ground

which would justify overturning the trial court’s

finding that plaintiff is precluded.”’

See also Williams v. Chicago, 8. F. & L. Ry. Co. (1892),

112 Mo. 463, 20 S. W. 631, 637.

a

From the foregoing the conclusion seems warranted that

the decision of the Circuit Court of Appeals is in accord

with the weight of authority as well as with local law.

III. No Important Question of Federal Law Is in Issue.

Petitioner contends that

‘*Questions 3 and 4 stated supra under the heading

‘Questions Presented’ involve an important question

of Federal law as to whether or not under the Act

to Regulate Commerce (49 U. S. C. A., Sec. 1, Par. 4

and Sec. 15, Par. 6), the Illinois Lines could legally

establish a division of 10¢ per cwt. by the method

they pursued in this case. Under point 1 of the argu-

ment in the supporting brief, we state the argument

against the right to so establish a division of a joint

rate. The opinion below refused to decide this ques-

tion (R. 597, 598).

‘‘The exact question here presented has not been

decided by this court. It involves an interpretation

of the above sections and paragraphs of the Act to

Regulate Commerce which is, of course, a Federal

question. The correct decision of this question is a

matter of great importance to all railroads whose

rates and divisions are subject to Federal regulation

and we submit certiorari should be granted’’ (Peti-

tion page 21).

The question is merely academic and it is not therefore

properly before this Court. The Arbitrators, the District

Court and the Circuit Court of Appeals have all unani-

mously held that the issue of the legality of the action of

the Illinois lines in withholding a greater proportion of

the revenue was not relevant and material to the decision

of the present case, and that no liability could be fastened

on respondent for the said action of the Illinois lines. The

point has already been discussed in this brief, supra, and

the fact that the Circuit Court of Appeals held the issue

iss

immaterial (Record pages 598-599) does not seem to call

for the exercise of the extraordinary remedial powers of

certiorari which are invoked on the theory that the Circuit

Court has ‘‘decided an important question of Federal law

which has not been, but should be, settled by this Court’’

[Supreme Court Rule 38 (5) (b)].

Petitioner does not contend that under the common law

or statutes, it was the duty of the respondent to sue the

E. J. & E. It could not support that by any decisions,

and it appears obviously untenable that one intermediate

carrier should be obliged to sue for a proportion of the

through rate of another carrier, from a terminal carrier,

when the originating carrier has a well established legal

right, both under the statutes and at common law, to sue

and collect from such terminating carrier who alone has

collected its money and who alone holds it. And this is

true regardless of ‘‘junction settlements’’ which might

have been used by the intermediate carriers. This is

what equity would demand.

In the case of Atlantic Coast Line v. B. & 0. R. R. (1935),

12 F. Supp. 711, the United States Court for the Seventh

District said that it made no difference in the right to

sue that the terminating carrier already paid a part of

the rate to a connecting carrier. The Court said:

‘the defendant [terminating carrier] has not paid

to the plaintiff [originating carrier] the fair division

to which it is entitled. And this is true whether the

defendant in fact has overpaid the R. F. & P. [inter-

mediate carrier] or not. Even if it has, that would

be no justification for withholding from plaintiff the

amount to which it is fairly entitled. The plaintiff

at no time assented to the division which was made

by the defendant on its own initiative and responsi-

bility. * * * For that reason the motion to dismiss

the bill must be overruled’? (1. ¢. p. 720).

_—

sine

In other words, the originating carrier may sue the ter-

minating carrier regardless of payment to an intermediate

carrier if the amount paid is not the fair percentage.

CONCLUSION.

The decisions below are correct; there is no conflict;

and the case does not present any important question of

federal law requiring further review by this Court. The

petition for writ of certiorari should therefore be denied.

Respectfully submitted,

A. H. KISKADDON,

OLIVER J. MILLER,

JACOB M. LASHLY,

Attorneys for Respondent.

LASHLY, LASHLY, MILLER & CLIFFORD,

Of Counsel.

February 7, 1947.